The Real View

Jim Barnes was new to the real estate business and anxious to succeed. He learned quickly that one of the best ways to meet buyers was to hold open houses. Taking the advice of his broker, he volunteered to hold  listings open for other agents in the office. His offer worked.  A fellow agent had an impromptu invitation to Palm Springs for the weekend, and offered her advertised new listing to Jim for a Sunday open house. He gratefully jumped at the opportunity.

It was late on Sunday morning when Jim planted his borrowed open house signs at neighborhood intersections and in the front yard of the suburban San Diego home.  The owner's Volvo was in the driveway, but when Jim rang the doorbell nobody responded. Unconcerned, Jim retrieved the key from the lockbox and unlocked the door.

Once inside the neat home, Jim made the rounds, turning on lamps and lights and opening draperies. The master bedroom door was almost closed, but he could see someone asleep in the king sized bed around the corner. Not sure what to do, Jim quietly closed the door and retreated to the living room.

Within moments, the doorbell rang, and there stood a couple with two small children. Jim showed them through the newer single story home and apologized that the master bedroom could not be seen at the present time. They seemed interested in the home. Jim suggested, "If you come back later, the owner will have awakened and I can show you the master suite."

The family had just departed when another group of potential buyers showed up at the door. Once again, Jim showed all of the home sans master bedroom. The scenario repeated itself all afternoon, as Jim built up some nice additions to his potential client datbase.

Traffic had slowed down by 4 p.m. and Jim once again wondered about the sleeping owner.

He walked up to the double master bedroom doors and knocked softly.

No answer.

He knocked louder and called out for Mr. Knowlton.

No answer.

A feeling of dread enveloped Jim.  He gently opened the door and called out to the man who had not moved (not a bit).

No answer.

Mr. Knowton was dead--and had been so for a number of hours.

It was a day of heavy learning for Jim. He endured police questioning until late in the evening, and comments from agents for months. The clients he met that day appreciated the follow-up call and his story. 

It turned out that Mr. Knowlton died of natural causes, but decided to exit on his own time--and with a sense of humor.

It was an open house and Halloween-season story Jim Barnes will never forget.

(The story is true; all names have been changed.)

The following information is just too rich to keep to myself. I also think that writing helps the mind digest ideas, or something like that. Anyway, Blog Guru Vincent Maher, a journalism lecturer at Rhodes University, has created a list of eleven guidelines that successful bloggers should follow.

As a former journalist, I found Vincent Maher’s commentary on journalism vis-à-vis blogging to be a real mind grabber. He compares the two writing vehicles and concludes that “the blogger is more like a community manager, than a writer in the greater scheme of things.” I immediately thought of Active Rain’s Maureen Corps, Kristal Kraft, Broker Bryant and talented others who write blogs that invite and welcome community participation.

Here are Professor Maher’s ELEVEN COMMANDMENTS (His commandments; my synopsis):

• A blog entry is a stub for conversation: Your job is to create a community of readers who interact with one another. Your blog entries should be short, punchy and structured to start conversations. The message should be clearly targeted, with a point or set of points.
• Think about the perspectives of your audience: Active Rain is easy. We talk to each other about the very broad field of real estate. We don’t come here to discuss fly fishing.
• Write tight headlines that encourage interest: Make your headlines catchy. If it’s boring, you won’t catch a reader’s eye or clicking finger.
• Make points or lists and make then scan-friendly:  Online readers don’t like to read long paragraphs and blocks of copy. Use lists that make article-scanning an easy thing to do.
• Link to the context: If you are blogging about a subject others are also addressing, provide links to their conversations so you don’t appear to be speaking out of context. It is good when you link to other sites, because you help your readers to understand your point of view.
• Quote indirectly and link: Rephrase quotations indirectly and link to the referenced source whenever possible. Avoid cutting and pasting whenever possible.
•  Format long documents for print: Consider offering a short digest version of long essays, with a link to the original document.
•  Never delete anything:   It is poor form to delete a post and its comments. In fact, Maher says it is a cardinal sin. Far better to post a correction—or apology—on the original entry (unless you are going to be sued!)
• Troll the blogosphere for secondary conversation:  A sign of a good blog is one that gets blogged about by other bloggers. Use Google Blog Search and Technorati to track what others are saying about your blog. Then, in the spirit of generosity, update your blog with links to those conversations if they add to yours.
• Be active in your own conversations: Don’t sit in front of your screen and do nothing as you watch comments come in. “Get in there!” commands Maher. “Unlike traditional journalists, the blogger’s role is to steer and be a part of the conversations they start.”
• Create buzz everywhere: Create lots of buzzzzz. Create inbound links to your post, find other blogs discussing similar issues. and post comments with links to your content—or the view put forth by one of your commenters. Think Real Estate Carnival—or running into traffic, as the Juicy Tomato suggests!

More than ever, I am coming to appreciate Web 2.0 and the communities it spawns.

In a vigorous seller’s market, it was fun to push the pricing envelope and go for new pricing records—set in record time. As listing agents, we prided ourselves on our happy sellers and their delighted neighbors. It was fun to represent sellers and help them negotiate multiple offers.

These days, we are on the bloody edge of the envelope, setting new lows in recent real estate market history. Most of our sellers are motivated, and grateful that we are able to move their home at all. A few are even being introduced to the fun of short sales. Smiling buyers are re-entering the real estate scene in many cities—including the San Diego area.

The valuation of unusual and luxury homes in a declining market can present special challenges to the real estate professional. What if there are no recent or nearby comparables? On what can you base your valuation?

In her book, Rich Buyer, Rich Seller, Laurie Moore-Moore suggests using the subject property itself as a comparable. In this case, the agent would look at the last time the property was sold, then calculate how much market prices had changed in that price range—and then apply that percentage to adjust the prior sales price to a current workable value.

In other words, if a property had sold in June, 2004 at $1,000,000 and prices since that time had declined 8 percent, a current valuation might run around $920,000.  It may not be the best or most accurate valuation tool, but it helps to be able to quantify your opinions of value.

Of course, it seems this tool might work only if the sale was not too far in the distant past and if no substantial improvements to the property had been made.

Food for thought!

http://www.sandiegopreviews.com/

Yesterday was spent constructing yet another short sale file. A home purchased less than two years ago with 100 percent financing had been refinanced a few months ago with two loans totaling $120,000 more than the original purchase price. I'm sure hefty points were back- ended into the loan, but the buyer pulled enough cash to buy a new car, furniture, and who knows what else--and is in serious arrears (over $50,000) with both loans. Good credit has never been his strong suit.

The home is in a lovely neighborhood and will probably sell fairly quickly--at around $685,000, or what was initially paid for the property. Meanwhile, the seller is out of the country, scheduled to return sometime around the end of the month. I will present the offer(s) to the lenders and will await their reply.

In the meantime, I am wondering about appraisals and shaky credit and investors, somewhere, who are going to get burned. We want to point fingers, but need several to do the job justice. Two would point to brokers and lenders who were accepting easy money and passing the risk on to others. Another would point to ignorant or greedy borrowers who believed property values had nowhere to go but up. Some surely knew what was happening, and took lenders for all they could.  

The bottom line is greed.

The amazing thing is that this partiicular lender (Countrywide) is STILL sending mailed notices to these defaulted homeowners advising that they could immediately qualify for over #100,000 in credit!

Where does the madness end?

Late yesterday afternoon during rush hour traffic, I received a call on one of my listings. The gentleman was in front of the property and wanted to see it immediately. I was 45 minutes away and headed to another appointment. I asked if he would like to see it the next morning; he declined and said he was leaving town.

I suggested that we might find someone else to show him the property and asked if he was working with an agent. He said he was. I suggested he call his agent and arrange for a showing. Man-on-the-phone said that is not the way he and his agent work. His agent only wrote the offer and didn't show properties.

Taking a deep breath and checking my anger. I suggested once again that he call his agent and arrange for a showing. I did not want to intrude upon their relationship--or in any way trip on the dual agency ropes. Moreover, I explained, it would be very unfair to ask another agent to break away, fight traffic and show a property on behalf of some other unknown agent.

He then asked if the sellers would take an offer of $50,000 off the list price of $349,000. I explained that I present ALL offers and work on behalf of our Seller's interests. And his agent should be working on his behalf as well.....

Are other agents in other markets strugging with these Phantom Agents?

Several times a week, I receive calls from San Diego appraisers seeking guidance on home valuations. It is a slippery slope. Twice in the last month, we have been involved in transactions where the purchase price was 10- to 15 percent under the lender's appraised value.  In one situation we represented a very cautious buyer and in the other, a very motivated seller.

Nothing can take the place of current information and history is a great teacher. Nathan Rothschild was able to multiply his fortunes twenty times over by knowing  the outcome of Napoleon's Waterloo in advance of the market. Using this timely information, he was able to manipulate a market sell-off and then purchase the securities back at a fractional cost. Rothschild had a web of spies and couriers throughout Europe who served one purpose: Information gathering.

Real estate information is not much different. If  home sellers or buyers uses online valuation models like Zillow to guage selling or offering prices, they could be making one of the most expensive decisions of their lives. The incomplete information retrieved could be based on information six months old--and reflect valuations that could be painfully outdated.  Sellers could be deluded into believing their home is worth far more than what the current market dictates, and Zillow-reliant buyers could be offering far more than they should. Being able to anticipate market conditions and move accordingly is both an art and a science--and one that is not addressed by Zilllow, HouseValues and other online valuators.

And when the market turns once again, Zillow will be one of the last to know because they will be reporting what has already happened, versus what is happening NOW. There is nothing that can replace a knowledgeable, highly informed and proactive real estate professional when it comes to pricing and negotiations. Should we be threatened by Zillow?

I think not.

Search San Diego Real Estate: http://www.SanDiegoPreviews.com

Kristal Kraft's blog stirred up a lot of discussion, and several responses mentioned that long-tailed film, What the Bleep Do We Know? It is long-tailed, because it is slowly gaining a larger and larger audience. It is a commercially gutsy film that dares to address such things as how quantum physics, molecular biology and neuroscience can affect our everyday lives and reality.

The film looks at such seemingly random things as:

Non-rational way of knowing, which is intuition, faith, insight, nature and body-based wisdom.

Our addictions: Are we really addicted to those things we cannot control? (a departure from the quantum discussion)

Paradigm Shifts -- Best said by Mark Woodhouse: "To change a major paradigm is to change our definition of what is possible." Consider the magic in that! Our old comfort with absolute answers should perhaps be replaced by a new comfort with uncertainty.

Water?  The film discusses and illustrates Dr. Masuru Emoto's discovery that crystals formed in frozen water reveal remarkable changes when specific and concentrated thoughts are directed to them. For example, water from pure natural springs and water that has been "blessed" with loving words, show beautifully compex snowflake patterns. Water that has been exposed to pollution and/or hateful words form "incomplete and asymetrical patterns with dull colors."  Dr. Emoto's well-publicized research shows exquisitely how our thoughts and feelings affect our physical reality. 

Many here have already seen the film--and each of us derived something different from the experience, I have just ordered the longer sequel, What the Bleep: Down the Rabbit Hole from the Bleep site.  I figure once I get the hang of these things, the real estate market (for starters) will be just what I intend.

And maybe the real estate slowdown is good and meaningful and just as it is supposed to be.

(one of Emoto's water crystals: Love)

http://www.SanDiegoPreviews.com

...But no crash is seen in the vast majority of U.S. metropoli (sic), according to a new report issued by Moody's Economy.com  In the San Diego real estate market, prices are expected to fall an estimated 8.5 percent from the market apex at the close of 2005--through the first half of 2008, when the market is expected to bottom.

San Diego ranked 37th on the list of cities where prices are predicted to decline most sharply. Danville, Illinois heads that list, where prices are projected to drop 18.7 percent. That unfortunate city was followed by Fort Myers, FL, Reno, NV, and Merced and Stockton, CA. Not included in this list are condo properties because sufficient data is lacking. I expect the news would be even worse in that sector.

This report studies 379 metropolitan markets, and predicts that only a third will be subjected to home pricing declines. These struggling markets are concentrated in California, Florida, and the northeastern region stretching from southern Maine to just south of Washington, DC. It also includes some distressed areas in the Midwest, including Detroit.

The article in this morning's San Diego Union Tribune describes the current market as being in a "correction" mode rather than a "crash," and that prices will drift lower and stay down for awhile. "It will take at least a couple of years to work off the excesses of the last decade," according to Mark Zandi, chief economist at Moody's Economy.com 

Meanwhile, our sellers are seeking the tipping point in price reductions that will result in a sale....

Real estate pricing has become a minefield, particularly for homebuyers and homesellers in volatile markets such as California, Nevada, Arizona and other former hot spots.  As real estate markets shift, the old comparable sales model for offers and pricing may no longer be quite so valid--and could in fact be dangerous. If sellers overprice their properties--based on prior sales that may have occurred some months ago--they run the risk of having their homes go unsold. On the other hand, if  buyers use the same CMA tools to arrive at an offer, they run the risk of overpaying.

What I am beginning to see is more verbal interaction between agents. We are verbally sharing information about properties and sales before that data ever hits the tax records. This is information we can use to help guide our clients through these dangerous times. One who needs to sell a property cannot afford to deal with faulty dated information or an uninformed agent. To do so could result in a home that doesn't sell and languishes on the market for months. Using the same outdated information, buyers run similar risks of potentially overpaying for a property--or not knowing if a home is fairly priced in today's market.

Several thoughts:

1. Real estate agents need to be consultative in their approach with clients, and closely in touch with one another. As real estate professionals, we need to share with each other what is happening in area markets, in local markets. in neighborhood markets. This is information our clients need.

2. Online valuation tools are perhaps even less valid than they were six months ago. Zillow does a good job in reporting history via public records, but more current information is demanded. Old information can be deadly--but that is all they have to report.

3. I am finding buyers more ready to purchase if they trust their Realtor is digging out the information truly needed to craft an offer. More agents are calling each other about pending sales, seeking pricing guidance for both buyers and sellers. This is good and serves our clients well.  

Real Estate 2.0 may be all about online interactivity between clients, agents, lenders, stagers and other real estate service providers, but some old school tools come in handy as well. Key among those are gossip and whispers. If a seller in a neighborhood is capitulating in pricing, that is important information for both buying and selling clients. Tax records are rather useless in this circumstance, and so are the online valuation tools that use them.

It is difficult for all when real estate markets go about their periodic shifts. These are the times when knowledge, experience and sure footing are required of the real estate professional. And by the time the valuation software tools catch onto what is happening, the markets may be quietly shifting again.

It is nice to be needed.